The sandstone reservoirs in the third interval of the Paleogene Shahejie Formation are crucial to petroleum exploration in the Zhanhua depression. Factors controlling reservoir quality and porosity evolution were quantified by integrating petrographic observation, cathodoluminescence examination, scanning electron microscopy, fluid inclusion, x-ray diffraction, oxygen stable isotope, and basin modeling. The porosity of the sandstone reservoirs in the third interval of the Shahejie Formation are controlled by clay content, carbonate cementation, and oil emplacement. The sandstone reservoirs are divided into four types, according to porosity evolution. Type I reservoirs are characterized by a high clay content and low porosity, in which the porosity loss was primarily due to mechanical compaction during the eogenetic stage. Type II reservoirs are characterized by extensive carbonate cementation and low porosity. Carbonate cementation mainly occurred during the mesogenetic stage. We believe that type III reservoirs have higher porosity and lower carbonate cements than the type II reservoirs because of oil emplacement. Oil emplacement occurred during the late mesogenetic stage, which retarded later ankerite cementation. The effect of oil emplacement on reservoir quality depends on the timing with reference to diagenetic sequence. The type IV reservoirs with the least carbonate cements and the highest porosity are the best reservoirs. The controlling factors on reservoir quality and porosity evolution, as determined by this study, are useful for predicting high-quality reservoirs in the Zhanhua depression and other analogous rifted lacustrine basins.